ACIT, NEW DELHI vs. M/S. SCHNEIDER ELECTRIC CONZERV INDIA PVT. LTD., GURGAON

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : “G” NEW DELHI BEFORE SHRI NK SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER

ITA No. 6690/Del/2014 A.Y. 2009-10 ACIT, Circle 7(1) Schneider Electric Conzerv India New Delhi vs. P Ltd. Amalgamated with Schneider Electric India P Ltd. 9th floor, Tower CIT(A), Phase II Gurgaon PAN: AAACE6272F

Cross Objection No.211/Del/2017 (In ITA No. 6690/Del/2014) A.Y. 2009-10 Schneider Electric Conzerv ACIT, Circle 7(1) India P Ltd. vs. New Delhi Gurgaon (Appellant) (Respondent)

Department by Sh. Kaushlendra Tiwari, Sr.D.R. Assessee by Shri Ved Jain, Adv. Sh. Asish Goyal, Adv. Date of Hearing 28.12.2017 Date of Pronouncement 27.02.2018

ORDER PER BEENA A PILLAI, JUDICIAL MEMBER The present Cross Appeals have been filed by revenue as well as assessee against order dated 01/01/14 passed by Ld.CIT(A)-10, New Delhi for assessment year 2009-10 on the following grounds of appeal:

ITA No. 6690/del/2014 1. On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 24,70,245/- made by the Assessing Officer (AO) u/s 40(a)(ia)." 2. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 65,91,354 made by the Assessing Officer on account of provision of Gratuity." 3. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 28,50,000/- made by the Assessing Officer on account of performance Bonus." 4. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 11,37,956/- made by Assessing Officer on account of interest paid to other banks." 5. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 13,66,675/- made by the Assessing Officer on account of payments made to American Express Bank." 6. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 3,54,983/- made by the Assessing Officer u/s 80G." 7. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 28,48,428/- made by the AO on account of disallowance of expenses paid on behalf of promoters on share price agreement." 8. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the additions of Rs. 1,83,983/- made by the AO on account of depreciation on UPS and Bar code." 9. "On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the Assessing to verify the computation on account of deduction u/s 35(1 )(iv)." 10. "The appellant craves to modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

CO No. 211/del/2017 1. (i) On the facts and circumstances of the case learned CIT(A) has erred both on facts and in law in confirming the action of the AO in allowing deduction u/s 80 IB to Rs. 13,09,620/- as against an amount of Rs. 1,43,09,519/- claimed by the assessee. (ii) That the CIT(A) has erred both on facts and in law in confirming the action of the AO rejecting the detailed explanation and evidences filed by the assessee in this regard. (iii) Without prejudice to the above and in the alternative, deduction u/s 80 IB has to be calculated on the assessed income & not on returned Income. 2. (i) On the facts and circumstances of the case learned CIT(A) has erred both on facts and in law in confirming the disallowance of Rs. 4,380/- made by the AO invoking the provision of section 14A of the Act. (ii) That the CIT(A) has erred in confirming the disallowance u/s 14A rejecting the contention of the assessee that in the absence of any exempt income having been earned during the year, no disallowance u/s 14A is called for. 3. That the respondent craves leave to add, amend or alter any of the grounds of appeal.

Amount Rs. Amount Rs. Gross total income as 119447569 per return Add: u/s 14A 4380 40 a (ia) 2470245

Provision for gratuity 6591354 Performance bonus 2850000 Interest paid other than 1137956 banks Payment to American 1366675 Exp Bank Payment on behalf of 2848428 Promoters Depreciation on UPS and 183983 Bar code u/s 35(1)(iv) 10229684 Total disallowance 27682345 27682345 Gross total income 147129914 Less: Deduction u/s 80IB 1309620 u/s 80IC 5209447 Total deduction 6519067 6819067 Taxable income 140310847 140310850

2.1. Aggrieved by the additions made, assessee preferred appeal before Ld. CIT (A). The Ld. CIT (A) after considering submissions advanced by assessee as well as remand report obtained from Ld.AO on certain additional evidences filed during the proceedings, partly allowed the claim of assessee. 2.2. Against the order of Ld. CIT (A) revenue as well as assessee are in appeal before us now. 3. We shall first take up the revenue’s appeal. ITA No. 6690/del/2014 Ground No. 1: Revenue is aggrieved by the decision of Ld.CIT (A) in granting relief to assessee to the extent of Rs.24,70,245/-.

3.1. Ld.AR submitted that during the assessment proceedings Ld. AO noticed the assessee debited sum of Rs. 24,70,245/-on account of interest on loan from directors and other interest charges. As assessee did not furnish details of TDS deducted thereon the amount was disallowed. 3.2. On appeal before Ld. CIT (A) assessee filed various details by way of additional evidence and submitted that sufficient opportunity was not granted to assessee for submitting the details during assessment proceedings. Ld. CIT (A) therefore called for remand report from Ld. AO. During the remand proceedings, the assessee again submitted copy of challan of Rs.45,886/-for TDS at 11.33% on Rs. 4,04,967/-and claimed that balance Rs.20,65,278/-was disallowed by the appellant company itself. Ld. AO therefore further called for the certificate of TDS in respect of the amount on which TDS was deducted, Ledger extract of parties to whom payment is made along with form 16 and called for the details as to why the interest was reflected as provision for interest. Assessee did not produce any evidences, therefore, Ld. AO rejected the contentions of assessee during remand proceedings.

3.3. Ld. CIT (A) partly allowed the claim of assessee by observing as under: “The appellant, however, has submitted that out of Rs.24,70,245/- of interest amount, the appellant had deducted TDS of Rs.45,886/- @ 11.33% on the payment of Rs.4,04,967/-. The balance amount of Rs.20,35,342/- was suo moto disallowed by the appellant in its computation of income. The facts being so there remains no reason to make further disallowance in respect of Rs.4,04,967/- on which TDS was already made and Rs.20,35,342/- suo moto disallowed by the appellant itself. However, no explanation has been given by the appellant for the remaining amount of Rs.29,936/- on which TDS has not been made. The appellant is silent about this balance amount and, therefore, the disallowance of Rs.29,936/- is upheld. Ground 6 is partly allowed.”

3.4. Aggrieved by the relief granted by Ld.CIT(A) to the extent of Rs.20,35,342/-revenue is in appeal before us. 3.5. Ld.DR placed reliance upon the orders of authorities below. 3.6. On the contrary the Ld.AR submitted that assessee has not claimed the said amount as expenses, but has made a suo moto disallowance which has not been disputed by the authorities below. 4. We have perused the submissions advanced by both the sides in the light of the records placed before us. 4.1. The computation of income for the year under consideration has been placed at page 84 of paper book wherein assessee has disallowed the said amount which has been added back to the income of assessee. Under such circumstances we do not find any reason for disallowance of such amount. Thus in our considered opinion view taken by Ld. CIT (A) cannot be found fault with. 4.2. Accordingly this ground raised by the revenue stands dismissed. 5. Ground No. 2: This ground raised by revenue is against the decision of Ld. CIT (A) in allowing the claim of provision of gratuity amounting to Rs.65,91, 354/-. 5.1. Ld. AO made disallowance treating the provision of gratuity as unascertained liability on the ground that assessee failed to provide necessary details/explanation in respect of the same. Aggrieved by the action of Ld. AO assessee preferred appeal before the Ld.CIT(A), before whom assessee submitted various additional evidences in support of its claim. Ld.CIT(A) accordingly remanded the issue to the assessing officer for due verification and consideration of additional evidences. 5.2. In the remand proceedings assessee submitted that the amount was paid to its approved gratuity trust in support of which evidences were filed, Ld. AO did not consider the above evidences filed by assessee on the ground that the same was not filed during the original assessment proceedings. 5.3. Ld. CIT (A) while considering the issue observed as under:

“However, it is noticed that the payment has already been done by the appellant to its approved gratuity trust on 27.5.2009 which is reflected in the bank statement of the Trust also. The facts being so the provision of gratuity is allowable u/s 43B(b) of the Act, and, therefore, this ground is allowed.” 5.4. Aggrieved by the order of Ld. CIT (A) revenue is in appeal before us. 5.5. Ld. DR placed reliance upon the assessment order. 5.6. On the contrary, Ld.AR submitted that due to insufficient time, assessee could not provide all necessary details in support of its claim. He submitted that the addition has been made only on the basis of the documents not being presented before the assessing officer during original proceedings. However assessing officer neither in the remand proceedings nor in the original assessment proceedings has made any observations regarding falsity of the claim made by assessee. 5.7. We have perused the submissions advanced by both the sides in the light of the records placed before us. The assessee during the remand proceedings submitted various documents to establish the payment made to the trust during the year, which has not been controverted by Ld. AO. Under such circumstances we do not find any reason to take a contrary view as Ld. CIT (A) has observed that the amount paid has been reflected in the bank statement of the trust. In the paper book filed before us at page 95 the account statement of the trust has been placed which reflects the amount being deposited by assessee and at page 97 the confirmation provided by the trust admits to the amount being received by them. 5.8. We therefore confirm the observations of Ld. CIT (A) and the same is upheld. 5.9. Accordingly this ground raised by revenue stands dismissed. 6. Ground No. 3: Revenue has raised this ground against relief given by Ld.CIT (A) in respect of performance bonus amounting to Rs.27,50,000/-. 6.1. Ld.AO disallowed the claim as assessee had not furnished any details before assessing officer during the assessment proceedings. 7

6.2. Aggrieved by the addition made by Ld.AO, assessee preferred appeal before Ld.CIT (A). Ld. CIT (A) decided the issue as under:

“The amount was disallowed in assessment order for not providing details whereas the AO himself has mentioned in his assessment order for not providing details whereas the AO himself as mention in his assessment order that amount was paid to Hema Hattangady(Rs.15 lacs) & Sh. Ashok Hattangady(Rs.13.50 lacs), hence this ground of addition is not correct. Moreover, as explained earlier vide point 8 of our submissions dt. Nov. 8, 2012, As per the policy / practice followed by the appellant company, performance bonus was assessed, reviewed and approved by the separate competent authority in HR deptt. There is a scientific and systematic system to evaluate the performance and payment of performance bonus; which is consistently being followed by the appellant and has been accepted by the department in its earlier assessments. Hence addition of Rs.28.50 Lacs on this account is liable to be deleted.” 6.3. Ld. DR submitted that assessee has not submitted any details to justify such huge bonus paid to two employees and what are the scientific method that has been applied and followed by assessee consistently. He submitted that the observations of Ld. CIT (A) regarding acceptance of the claim by assessee in the preceding assessment years is neither substantiated by any of the orders passed for earlier assessment years nor there has been any reference of any of the assessment years. He submitted that under such circumstances there has been gross negligence by Ld. CIT (A) in allowing such huge claim of performance bonus paid to these employees. 6.4. On the contrary Ld.AR submitted that assessee has been following a scientific method for payment of performance bonus to its employees which is reviewed and approved by a separate department in HR. He thus submitted by supporting the decision of Ld. CIT (A) that the said addition has been rightly deleted. 6.5. We have perused the submissions advanced by both the sides in the light of the records placed before us. 6.6. Admittedly neither Ld. AO made any reference regarding the addition in respect of performance bonus in the remand report, nor did assessee provide any order of any preceding assessment years passed by any Appellate 8

Authorities, wherein such bonus paid has been allowed. Assessee has not even explained what is the scientific method in determining the bonus payable to its employees for extraordinary performances. Ld.AR has not provided any details regarding the extra ordinary contribution by these employees in lieu of which such huge bonus has been paid amounting to Rs. 13.5 Lacs and 15 lakhs being Sh. Ashok Hattangady and Hema Hattangady respectively. 6.7. We therefore are not agreeable with the observations of Ld. CIT (A) in simply accepting the submissions advanced by assessee to allow the claim. Admittedly assessee in the remand proceedings has not submitted any details regarding the payments made to justify its claim. Thus we are of the opinion that no purpose would be served by setting aside this issue back to the file of Ld. AO. We thus confirm the addition made by Ld.AO in this regard and reverse the findings of Ld.CIT(A). 6.8. Accordingly this ground raised by revenue stands allowed.

“37. Details desired by the AO (including ledger copy of bank charges and Interest on Dealer deposit were submitted before the Ld. AO during remand proceedings vide our letters dt. 21/11/13 & 10/12/13 (Annexure B5, B54, B57 to B69)perusal which clearly indicate that all payments are in connection with the business of appellant co. (Rs.20,15,546/- towards Bank Charges and Rs. 2,60,365/- towards interest on dealer deposit). As complete details of expenses have been submitted and the fact that bank charges are debited by the Banks and appellant company's banks are duly reconciled(there is no adverse comment in the audit report)the addition is not justified. Hence, the addition of Rs. 11,37,956/- be deleted.”

7.3. Ld. DR placed reliance upon the order of Ld. AO as well as the remand report. 7.4. On the contrary Ld.AR submitted that assessee was enjoying cash credit facilities from the bank which is subject to renewal/delivery of processing and other charges periodically. It has been submitted that the charges are also levied for demand drafts, bank guarantee, collection charges, overdue export bills charges etc. 7.5. We have perused the submissions advanced by both the sides in the light of the records placed before us. The details of interest other than banks has been placed at page 143 and Ledger copy of the bank charges and interest on dealers account are placed at page 163 to 174 of the paper book. It is observed that the said amount is towards various charges in connection with the business activity of assessee. We therefore do not find any infirmity in the observations of Ld. CIT (A) and the same is upheld. Accordingly this ground raised by revenue stands dismissed.

regarding the travel expenses incurred by its two employees have been placed at page 98-134 of the paper book. It has been submitted by Ld. DR that the occasion for incurring these travels has not been substantiated by assessee on the basis of cogent materials. 8.6. Ld.AR on the contrary submitted that assessing officer has disallowed 50% of the payments on ad hoc basis. He submitted that nature of expenditure incurred by assessee being inextricably connected with business activity of assessee has not been disputed. The disallowance has been made only for the reason that the credit card stood in the name of individual employees. He supported the order of Ld. CIT (A) and submitted that ad hoc disallowance without there being any cogent material cannot be sustained. 8.7. We have perused the submissions advanced by both the sides in the light of the records placed before us. 8.8. Admittedly assessee has not explained by way of evidence regarding details of travel expenses incurred by these employees and the purpose of travel. Except for giving a chart in which the status of the employees the date of travel and the amount incurred on each date, purpose of travel has not been explained by assessee. Thus under such circumstances, the element of personal benefit in these travel undertaken by these employees cannot be overruled in the absence of cogent material. Thus the disallowance made by Ld. AO was on ad hoc basis as assessee has failed to establish the nature of entire expenses being incurred purely for purposes of business. Therefore in the interest of justice we restore this issue to Ld. AO for proper verification of expenses. Assessee is directed to produce all necessary evidence in lieu of the same. 8.9. Accordingly this ground raised by revenue stands allowed for statistical purposes. 9. Ground No. 6 This ground has been raised by revenue in respect of the accepting the claim of assessee under section 80G amounting to Rs.3,54,983/-. 9.1. During the assessment proceedings Ld. AO observed that assessee made various donations to trust/institutions/associations. Ld. AO made addition as

assessee could not provide donation receipt amounting to Rs.7,09,996/- or certificate from the trust to whom donation has been made. 9.2. Aggrieved by the addition made assessee preferred appeal before Ld.CIT (A). Before him assessee filed copies of donation receipt amounting to Rs.7,09,996/-. Ld. AO in the remand proceedings rejected the claim of assessee as assessee did not furnish the certificate from the trust to whom the donation has been made. 9.3. Ld. CIT (A) deleted the addition by observing as under: “It is observed that payments made to Seva Trust were qualified for deduction u/s 80G as the same is evident from the face of receipts where tax exemption u/s 80G with lr no.EIT(E)/80G/49/W-2/03-07 valid upto 2007-2010 has been printed. Similarly, donations given to Missionaries of Charity, Kolkata are also qualified for deduction u/s 80G. Similar is the case regarding donation paid to Anugraha Trust ® Reg.S 470/03-04, however, the receipt from the AOP with disability is silent about such deduction u/s 80G of the Act. The facts being so deduction u/s 80G of the Act only be given in respect of donations to Seva Trust, Missionaries of Charity and Anugraha Trust only. The AO is directed to recompute the same on the basis of receipts furnished in respect of donations to above mentioned three entitites only. Ground partly allowed.” 9.4. Ld. DR placed reliance upon the order of Ld. AO and the remand report. 9.5. On the contrary Ld.AR submitted that the donations were made through account payee cheques and proper receipts from the donees have been submitted during the assessment proceedings. 9.6. We have perused the submissions advanced by both the sides in the light of the records placed before us. 9.7. Admittedly except for the donation paid to Seva Trust and Anugraha Trusts, Association of people with disability is silent about the deduction available under section 80 G of the Act. Under such circumstances Ld. CIT (A) was right in allowing the claim of assessee under section 80 G of the act only to payments made to trust which has specifically mentioned 80 G certification on the receipt. 13

9.8. Accordingly this ground of revenue stands dismissed. 10. Ground No. 7 This ground has been raised by revenue against the decision of Ld. CIT (A) for deleting addition partly on the advances given to director/promoters or incurring expenditure on their behalf. 10.1. During the assessment proceedings Ld. AO made addition as assessee failed to provide details or copy of the agreements regarding the amount paid by assessee on behalf of the promoters on share price agreement. 10.2. Aggrieved by the order of Ld. AO, assessee preferred appeal before Ld. CIT (A). Ld. CIT (A) remanded the issue to Ld. AO for due verification. During the remand proceedings assessee submitted before Ld. AO that the amount spent on behalf of the promoters were shown as recoverable under the head ‘loans and advances’ and the same has not been claimed as expenditure in the P&L account. It was further submitted that the said amount was recovered in the month of May/June 2009 and assessee had furnished bank statement in support of its claim. Ld. AO called for the agreement which was not filed by assessee and therefore the addition was confirmed. Ld. CIT (A) after recording various reasons deleted the addition partly. 10.3. Revenue is aggrieved with this partial deletion of addition made by Ld. CIT (A). 10.4. Ld. DR placed heavy reliance upon the order of Ld. AO as well as remand report. 10.5. On the contrary Ld.AR supported the order of Ld. CIT (A). 10.6. We have perused the submissions advanced by both the sides in the light of the records placed before us. 10.7. Ld. CIT (A) observed that the directors/promoters to whom advances were given had substantial interest in the company and therefore provisions of section 2 (22) (e) were attracted. Accordingly a show cause notice was issued to assessee as to why the amount should not be treated as deemed dividend in the hands of assessee. Assessee vide reply dated 26/08/14 submitted details of the promoters from whom the amount was recoverable and their shareholding 14

in the company, which has been reproduced at page 50-53 of the order of Ld. CIT(A). Ld.CIT(A) after considering various submissions of assessee decided the issue as under: “In view of the above, the amount of Rs.28,48,428/- which is the expenditure incurred by appellant company on behalf of promoters and shown as loan/advance recoverable from them in the books of accounts is definitely treated as deemed dividend u/s 2(22)( e) of the Act. Regarding the taxability, the same should be taxed in the hands of these shareholders who have substantial interest in the appellant company as held by the decisions relied upon by the appellant. Since some of the shareholders were having share holding in the appellant company for less than 10% only, advance given to them, if any, shall not qualify as deemed dividend. The A.O. is directed to quantify the advance given by the appellant company to the shareholders having share holding of 10% or more for treating such advances as deemed dividend in their hands. The A.O. is directed to inform the A.O. having jurisdiction over the shareholders to bring such deemed dividend in their hands for tax purposes. Ground No.12 of appeal is partly allowed.” 10.8. We do not find any infirmity in the above reasoning by Ld. CIT (A) and the same is upheld. 10.9. Accordingly this ground raised by revenue stands dismissed. 11. Ground No. 8 Revenue is aggrieved with the addition that has been deleted on the depreciation claimed on UPS and barcode scanners amounting to Rs.1,83,983/-. 11.1.During the assessment proceedings Ld. AO had restricted the depreciation on UPS and barcode scanner to 15% by treating them as plant and machinery instead of computer accessories. Aggrieved by the addition made by Ld. AO, assessee preferred appeal before Ld. CIT (A). Ld.CIT(A) deleted the addition. 11.2. Against the action of Ld. CIT (A) revenue is in appeal before us. 11.3. Ld. DR placed reliance upon the order of Ld. AO. 11.4. Ld.AR supported the order of Ld. CIT (A). 15

11.5. We have perused the submissions advanced by both the sides in the light of the records placed before us. 11.6. In our considered opinion this issue has now attained finality by the decision of Hon’ble Delhi High Court in the case of CIT vs. BSES Yamuna Powers Ltd reported in (2013) 358 ITR 47, wherein Hon’ble High Court has upheld the claim of depreciation on UPS and computer peripherals at 60%. 11.7. Accordingly this ground raised by revenue stands dismissed. 12. Ground No. 9 During the assessment proceedings AO had reduced the claim of assessee under section 35 (1) (iv) of the Act to the extent of Rs.1,02,29,684/-. It was submitted that assessee was eligible for weighted deduction at 50% as per DISR guidelines. 12.1. Aggrieved by the addition made by Ld. AO, assessee preferred appeal before Ld. CIT (A) who directed Ld. AO to verify the computation and allow the deduction under section 35 (1) of the act as per law. 12.2. Aggrieved by the decision of Ld. CIT (A) revenue is in appeal before us now. 12.3. Ld. DR placed reliance upon the order of Ld. AO. 12.4. We have perused the submissions advanced and it is observed that Ld. CIT (A) has simply directed Ld. AO to verify the claim of assessee to be allowed as per law. Accordingly the same is upheld. 12.5. Accordingly this ground raised by revenue stands dismissed. 13. In the result the appeal filed by the revenue stands partly allowed. 14. CO/211/Del/17 Ground No. 1 In the Cross Objection the only grievance raised by assessee in this ground is regarding the deduction under section 80 IB being calculated on the assessed income after making various disallowances and additions. 14.1. It has been submitted that Ld. AO accepted the apportionment of profit on the basis of turnover and also apportionment of profit of the eligible business and non-eligible business based on the value addition at the two 16

businesses for arriving at the profit of eligible business. Assessee by way of Cross Objection is seeking to apportion the disallowance and additions made in the same ratio to the eligible and noneligible business for computing deduction under section 80 IB on Daman unit. 14.2. Ld.AR has submitted that the deduction in respect of 80 IB was also raised in an application under section 154 . He placed reliance upon the 1st appellate order passed for assessment years 2005-06 2006-07 2007-08 placed at page 210-230 and the order passed by Coordinate Bench for 2005-06 and 2006-07 dated 21/12/11 placed at page 231-242. 14.3. Ld. DR on the contrary submitted that Ld. CIT (A) in the preceding assessment years has allowed the claim of assessee subject to verification. He distinguished the order of this Tribunal for assessment year 2005-06 and 2006-07 on the ground that the issue therein was regarding admission of additional evidence in respect of the claim of assessee. 14.4. We have perused the submissions advanced by both the sides in the light of records placed before us. It is observed that assessee was unable to produce the order passed by Commissioner of Central Excise Bangalore which has direct bearing on the issue agitated before us. This Tribunal for A.Y. 2005-06 and 2006-07 has remanded the issue back to Ld.AO for fresh adjudication in accordance with law vide order dated 21.12.2011 in assessee’s own case. Respectfully following the same, we set aside the issue back to file of ld.AO for fresh adjudication of this issue in the light of order passed by Ld.AO for A.Y. 2005-06 and 2006-07. Assessee is directed to file all necessary documents in support of the claim. 14.5. Accordingly this ground is allowed for statistical purposes. 15. Ground No. 2 has been raised by assessee in respect of provision of disallowance of expenditure under section 14 A of the act. 15.1. Ld. CIT (A) disallowed administrative and managerial expenses for maintaining the investment portfolio by applying rule 8D of the act. 15.2. Ld.AR has submitted that assessee for the year under consideration has not earned any exempt income which do not form part of the total income. He 17

submitted that under such circumstances no disallowance could be made under section 14 A of the act. 15.3. He placed reliance upon the decision of Hon’ble Delhi High Court in the case of Cheminvest Ltd versus CIT reported in 378 ITR 33. 15.4. On the contrary Ld. DR placed reliance upon the decision of authorities below. 15.5. We have perused the submissions advanced by both the sides in the light of the records placed before us. 15.6. As assessee has not received any exempt income for the year under consideration, no disallowance is warranted for as per the decision of Hon’ble Supreme Court in the case of Cheminvest Ltd vs. CIT (supra). Respectfully following the same we delete the addition made by Ld. CIT (A). 15.7. In the result the ground raised by the assessee stands allowed. 16. In the result Cross Objection filed by assessee stands allowed. 17. In the result appeal filed by Revenue stands partly allowed and the Cross Objection by assessee stands allowed. Order pronounced in the Open Court on 27th February, 2018.

Sd/- Sd/- (N.K.SAINI) (BEENA A PILLAI) Accountant Member Judicial Member

Dated: 27th February, 2018.

*mv

Copy of the Order forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File

By Order

Asst. Registrar ITAT, Delhi Benches, New Delhi